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HomeMy WebLinkAbout1991-05-13 91-208 ORDERCOUNCIL ACTION Item No. 91-208 Date Nay ),. 1991 Item/Subject: Non -aeronautical Land Lease Policy at Bangor International Airport Department: Community and Economic Development Commentary: Staff presented a series of recommendations regarding Airport Lend Lease Policies at a recent Council Workshop. A review of the existing leases at BIA reveals a wide range of terms for various ground leases at HLP. The leasee have been developed war a period of twenty years and, therefore, reflect the evolution of development activity at the airport. The recently completed Airport Master Plan and Eon -Aeronautical Land Development. Strategy provision _a solid basis for future development decisions. It is also important that we develop aconsensus n leasing Policy for the future. While the policy needs to be flexible enough to address individual circumstances, general guidelines will enable Staff to conaistertly and responsively deal with prospective leaaeea. The proposed lease policy was presented to the Community and Economic Development Committee who unanimously recommended approval to the City Council. parimen Manager's Commente:��TYgL ,Q>a.ae �tf cgee"'vim City Manager Aes«iated Information:© Finance Director Legal Approval: Sit , FAA, ,,,_,_p 7" I . �1 I1'"' \city p,Solic or X Passage First Reading Page 1 of 1 Referral 91-208 Assigned to Councilor Sullivan, May 13, 1991 CITY OF BANGOR (TITLE.) P011h e.. Ad, pt ng._.e S ea p£_eolicy Guidelines for ............... Land Le ;ng„at Bangor International By Uw Cary Cwnct! oftAe pry o(Bnnaar: MWIVED. WHEREAS, the City of Bangor has a extremely valuable land asset at Bangor International Airport and; WHEREAS, the City of Bangor should develop such resources an manner that complements the aeronautical function of BIA stimulates economic growth in the City and generates financial return for Bangor International Airport and the City of Bangor. THEREFORE, BE IT RESOLVED THAT the City of Bangor adopt a comprehensive set of policies which will guide future lease negotiations for non -aeronautical land use at Bangor International Airport. In City Council May 13,1991 Passed as amended Amende as follows Add the following Subject W PM Approval .✓POf Oarx, C ty Clerks EE S 0L VE Adopting a Series of Policy Guidlines foe Land Leasing at Ungor Intsroational 91-zo9 CITY OF BANGOR, MAINE GUIDELINES FOR LAND LEASING AT BANGOR INTERNATIONAL AIRPORT I. NEED FOR LEMING GUIDELINES A review of the existing leases at BIA reveals a wide range of terms for various ground leases at BIA. The leases have been developed ea period of twenty years and, therefore, reflect the evolution of development activity at the airport. The recently completed Airport Master Plan and Non -Aeronautical Land Development Strategy provides a solid basis for future development decisions. It is also important that the City o develops consensus n leasingpolicy for the future. While the policy needs tobeflexible enough to address individual circumstances, general guidelines will enable Staff to consistently and responsively deal with prospective lessees. II. OBJECTIVES OF AIRPORT LAND LEASE POLICY 1. To develop airport land resources in a manner consistent with the BIA Master Plan and Pan -Aeronautical Land Development Strategy. R. To generate revenues that diversify BIA'S revenue base. 3. To enhance the economic base of the City of Bangor and create job opportunities for its citizens. 4. To enhance the tax base of the City of Bangor. 5. To provide a full menu of development sites which provide a full range of commercial and industrial opportunities. 6. To offer competitively priced development sites which generally reflect the local market and do not undercut the private sector real estate market. III LAND NEGOTLATIONS: A TWO TIBRBD PROCBSS As previously described, it is important that a fair market value fox BIA land be established. Obviously, the City has overall economic development goals which may be different than a private real estate developer and may influence land lease negotiations. -1- Therefore, the following process should be utilized: 1. The baseline for land negotiations shall be the established fair market value of the land and; 2. Any lease coat write-down or incentives should follow the establishment of the fair market value. The decision to offer incentives in terms of lease rate should be based on factors such as: (1) number of new jobs to be created (2) a prospective project's role in imple- menting airport development strategy (3) tax base enhancement Therefore, a lease write-down is likely not appro- priate for an existing warehousing operation moving to an airport industrial park whereas such an incentive may be critical in the job creating expansion of a local industry or the attraction of a new business to the Bangor area. IV RECOR NDED LAND LEASE GUIDELINES Two major issues arising in land lease negotiations at BIA are lease length and lease rate. The following will describe policy guidelines. A Lease Length The general guideline for land lease length shall be changed from a 20/10/10 format to a straight 40 year lease term. It should be recognized that a shorter time frame may be appropriate for smaller projects and that more than 40 years any be cacees- ary on larger scale projects. B. Lease Sates (1) Initial Lease Rate: The City shall continue its current policy of estab- lashing the annual lease rate ae 10% of the fair market value of the land. Therefore, annual rent for a parcel with a current value of $200,000 would be $20,000 par year. Fair market value would be established through an appraisal or another method of determining the value of the property within the context of the local real estate market. -2- (11) Lease Rate Increases: For a typical 40 year lease, the initial lease rate shall be established by the previously described 108 of value formula. The 10% formula would also be applied in years 20 and 30. Between years 1 and 20, 20 and 30, and 30 and 40, the lease rate should be adjusted every 5 years in order to reflect changing land values. Thin economic adjustment could be made by using a variety of methods including: (a) Prenegotiated annual increases. (b) Adjustments based on the Consumer Price index or other indices. (c) Adjustments based on the performance of the project such as operating income. -3-